May 16 (Bloomberg) -- Veolia Environnement SA Chief Executive Officer Antoine Frerot won shareholder approval today for new board members after pledging to focus on “promising” countries while slashing debt and spending.
The Paris-based utility will push ahead with asset sales in the U.K. and U.S. as well as selling the transport business, Frerot told an annual meeting in Paris during which he defended the “transformation” of the company.
Frerot has shaken up management of Veolia this year and nominated new directors in a bid to bolster his position. His plans for asset sales and debt reduction depart from the strategy under predecessor Henri Proglio, still a director, who expanded Veolia to 77 countries. The new directors come after a boardroom struggle during which Proglio was reported to have tried to oust Frerot.
“We will have a more concentrated and more profitable company,” Frerot said today. “We’ll need two years for all the cost-cutting, deleveraging and management overhaul.”
Shareholders today approved Georges Ralli, who was already on the board, for a new mandate as the representative of holder Groupama SA, while Serge Michel also won a new term.
Maryse Aulagnon, Nathalie Rachou and Jacques Aschenbroich were voted in as new directors as was Olivier Mareuse as the representative of Caisse des Depots et Consignations, the biggest shareholder.
Changes at the top of Veolia have been accompanied by acrimony. Outgoing director Jean-Francois Dehecq was quoted yesterday in Le Monde newspaper as saying Frerot’s strategy is based on financial ratios, “short-term accounting” and “wretched” asset sales to boost the share price.
Dehecq is “wrong,” Frerot said today in response to a question.
The utility reported on May 4 a 12 percent slump in first-quarter earnings after a “difficult” economy hurt waste operations and profit from domestic water contracts. The European waste-collection business is in decline and profit margins on French water contracts are narrowing, Pierre-Francois Riolacci, Veolia’s vice president in charge of finance, said during a presentation of the earnings.
Veolia is targeting a reduction in net debt to less than 12 billion euros from 15 billion euros by the end of 2013. It plans to sell 5 billion euros of assets this year and next, cut operating costs by 120 million euros in 2013 and narrow its geographic reach.
The utility is aiming to complete the sale of its U.K. water and U.S. waste companies in July, Riolacci said today. Talks are ongoing with two potential acquirers for the utility’s stake in the Transdev transport business, Frerot reiterated.
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